If you’ve recently purchased a property for investment purposes or you’re looking to buy a property, one of the issues you might consider is “Do I need a property manager or can I manage the property myself?”
The role of the Property Manager is to lease and manage residential, commercial, industrial and retail property on behalf of the Landlord. Yet the actual activities within the role are rarely understood. Generally speaking, it is assumed that a property manager will simply find a tenant and collect the rent, take their fee and provide the remainder to the Landlord. The reality is that the role is far more complex that this basic principle. So, let’s break down the primary functions of the Property Manager, examine why it’s better to have an agent manage your property and the general costs associated with professional property management.
KEY ROLES OF THE PROPERTY MANAGER
The property manager’s duties include:
· Selecting tenants – There is a bit of a science here. Firstly, at least for Infinity Property Agents we subscribe to a system that allows us to look up the previous history of a prospective tenant. We also call personal references, discuss the tenant’s circumstances (family, pets, job) with the prospective tenant, speak with previous estate agents who have a rental history of the tenant and develop a proposal for the property owner who has the ultimate say.
· Collecting rent – it’s not just a matter of collecting the rent. We are also required to manage the arrears, prepare monthly statements of rental income and issue financial year statements for tax purposes. However, this is a key element. We need to ensure the correct rent is paid and it’s paid on time in advance.
· Maintenance – Having a preventative maintenance program for your property plays an integral part of your asset appreciation and ultimately saves you money. It also results in happier tenants who are more willing to treat your property as their own and this in turn results in lower vacancy rates and increased rental income upon lease renewal. An additional benefit of professional property management is the associations we have with our trade suppliers. They provide a more cost effective method of managing your maintenance and due to their loyalty to us, they provide a better, faster service with ongoing support and as an indirect result, limited tenant interruption. It’s important to also look after and respect your tenants.
· Marketing the property – Many assume that an ad on Gumtree will do the job. The reality is you want to find the right tenant at the right price and to do this you need to know where to advertise and for the best possible cost. Infinity Property Agents pays a sizeable monthly subscription to Australia’s top 6 property portals and currently your total advertising cost is limited to only $88. If you can get the same coverage cheaper yourself, let us know how you did it! We also market your property every Friday to a database of 3,700 prospective tenants and executive relocation agents for the Saturday Home Open.
– Home Open – In addition to marketing your property, we also speak, email and text prospective tenants to encourage them to attend the home open. We host the home open throughout the week and on the weekend and follow up with potential tenants and manage the screening process and completion of the Tenancy Agreement. We also report back to the property owner the results of the Home Open. That in itself is a major component of the rental process.
· Negotiating leases, bond and rent reviews – getting the right tenant is only one element of the mix. You also need to know how to negotiate the best rental income, at the right market rate for the appropriate period of time. You don’t want your lease to expire at the wrong time of the year, such as Christmas, which could result in a longer than normal vacancy periods. Infinity Property Agents will also ensure that your property remains under lease at all times whereas a number of other agencies will run an expired lease on a month to month basis. This jeopardises your financial position as your bank will require your mortgage payment regardless of whether your property is vacant or leased. We also review your property rent according to the market every five (5) months which even at industry standards is well above the average period. We also lodge the tenants bond with the Fair Trading Rental Bond Board, an independent authority that ensures the tenants bond is protected by a third party.
· Property Inspections – So, you’ve found a tenant. How do you know they’ll treat your property as you would expect? At Infinity Property Agents we visit our tenants once every five (5) months to inspect the property and review any maintenance issues with the tenant. It provides an ideal opportunity to take photos and produce a photographic inspection report which we pass on to our Landlords. It also limits maintenance costs on issues that have resulted over the period. We do this free of charge as a valued service to our customers.
· Financial Statements – At Infinity Property Agents, we employ a qualified, certified and registered CPA to manage your properties financial affairs, Landlord Insurance, costs of management, maintenance costs, reporting and distribution of your monthly and annual statements etc… We also provide 24/7 online access to your account statements.
· Manage strata related issues – for those that own a property under strata governance, the role of the Property Manager is to liaise with the Strata to ensure the property common and any specific Landlord unit interests are being managed appropriately. In some instances, Infinity Property Agents will attend strata meetings; deal with master key and fob management and levies (including special levies).
· Represent owners at Tribunal – Every now and again, things don’t always go to plan. Tenants cause damage, fail to pay rent on time (although we manage a tight rental arrears schedule). You simply can’t get it right 100% of the time. When issues relating to the Tenancy Agreement require tribunal intervention, the role of the property agent is to raise the issue with the tenant and the tribunal, set a hearing date, represent the landlord and provide the relevant documentation to support our case. This may result in termination of the lease or changes to the Tenancy Agreement or payment for damage and access the bond to make good the owners position. It literally is a case of treating your property as if we owned it ourselves.
Let’s now look at the costs associated with professional Property Management. In most cases, Property Managers will have their own fee schedule. This generally includes:
– A weekly “Management Fee” based on rent.
– A “Letting Fee” which is essentially the cost of a week’s rent – some agents will charge you more
– An “Advertising Fee” – a contribution to the cost of marketing your property. Some Agents charge a substantial fee for this service. You really need to balance the cost against the reach you receive. Doing it yourself can be very costly!
– “Lease Renewal Fee” – only applies upon renewal of a lease
– “Administration Fee” – a cost associate with the paperwork, mailing, photocopying, monthly statements, 24/7 online access
You can always call Infinity Property Agents on 9699 9179 to discuss the fee structure. We try to accommodate owners based on their circumstances and the number of properties they own.
Hopefully, if you have read through most of this article, you’ll now appreciate just a little more about why it’s better to have a professional estate agency manage your investment property. There are also tax benefits associated with the cost of management but best to talk to your Accountant in regards to this issue, as everyone’s circumstances are different.
Finally there are stress and time benefits. You simply have more time to focus on what YOU do best and you don’t have to deal with the stress associated with management issues.
If you are based in Sydney and you require a premium property management service at an affordable rate, call us on 9699 9179. We’d love to assist you with the management of your property.
Author: Bernie Tynes